NioCorp Developments Ltd. (NB) Earnings Call Transcript & Summary

Hello, today, we have Mark Smith, the CEO of NioCorp, trading on the NASDAQ under the ticker symbol, NB. Mark, welcome back.

Thank you, Craig. Always a pleasure to be here.

Recent reports in the Wall Street Journal and other media outlets suggests that China will continue to maintain a chokehold on heavy rare earth exports to U.S. companies connected to the defense sector. This is in spite of announcements in the United States that all export restrictions have been lifted on these defense critical materials. Can you provide us with your view on what is really going on here?

Yes. Unfortunately, Craig, what your question suggests is the truth. But first, let me praise President Trump for the absolutely amazing job that he's doing, trying to push back against the Chinese and get these rare earths flowing into the marketplace. He's really focused on that, and you can tell in the negotiations that that's 1 of his top priorities, and we can't praise the President enough for understanding the importance of this issue to us. But as the intel continues to leak out of China right now, what we're finding is, is that not much has changed. It appears that the Chinese may be undercutting that agreement with President Trump pretty fast. It appears as if all of the elements that were put into export restriction in April of 2025 are still restricted and we will still need a dual-use license at a minimum to get out of the country. And don't forget the dual-use license as the People's Liberation Army, is 1 of the reviewing parties. So this is going to be a problem. It's going to become just as serious as it has been since April, the markets just don't know about it yet.

Mark, you personally have been a commercial developer and an investor in the rare earth and critical minerals space for more than 3 decades. What are the most important due diligence factors investors should be looking for when researching potential critical mineral investments?

I'm glad you asked that question, Craig, because it's 1 that I'm thinking about literally every day of my life. I've been in the rare space for over 38 years. I've been in the mining industry for over 44 years. I love this industry, and I am an investor in this industry. And so I have come up with some very important things that I think other investors should be well aware of as well. Let's start out first with -- I always look to see, is there a bankable feasibility study level work that has been done on this project? So does it meet the NI 43-101 standards? Does it meet the S-K 1300 standards at the feasibility study level, not PEAs, not guesses, not assumptions. This is real technical work. And if it has that work available, now you can actually do due diligence on that project. And with that bankable feasibility study, you will now know what the ore grade is of that resource that you're looking to invest in. And if they don't have measured and indicated resource information and ultimately reserve information on that resource itself, stay away because you have no idea of what's in the ground. Second item that I take a very hard look at because you can have the best ore body in the world in the ground, but if you don't have metallurgy that can pull those elements out, and make them sellable to the customer specifications, then your ore body isn't going to do anybody any good and you're going to fail on that investment. So we look for that metallurgical work, and we look for the ability to say we have actually produced samples for customers that meet their specifications. That's huge. So those first 2 items to me, are the most critical. Then we can get into things like does the management team have the commercial experience to sell these materials. Do they have the operational experience to actually make these materials at a commercial scale? If they don't, that's going to be a very, very hard trail to hike and especially in the rare space. That is the most complicated mineral processing that I've ever experienced in my life. Number four, do they have all the permits in hand? If they don't have their permits in hand and especially if they're trying to open a mine in the United States, that can take 29 years to get your permits in place. We're way beyond that at NioCorp. We're very happy with that. Number five, I think that we need to look, does the project have strong local support? If it doesn't have strong local support, you don't have a license to operate in that area. So you need to make sure that you establish good, full of integrity, honest and truthful relationships with the local people because that's who you're going to be hand-in-hand with for years to come. Then there are some other smaller items that I do look for. Do we have any public land issues? Those can create permitting issues. Do we have indigenous people issues? That kind of goes to the local support, but that can be a much harder issue to deal with. And then finally, has the project received any level of government funding? If it has, that's a very strong statement of confidence that a government of whatever country is expressing for that project. So those are the things that I look at before I invest in a project and happy to say that every single 1 of those boxes is checked with bright green for NioCorp.

Thanks for that, Mark. Turning now to the Lockheed Martin's Skunk Works collaboration recently announced. That is a Pentagon-funded effort to advance scandium-based defense technology. Now what does that partnership mean for NioCorp's role in strengthening U.S. defense innovation?

Well, first of all, let me start out by reiterating something that I have said for a long time, and that is that the United States imports 100% of the scandium that it needs in this country today. And guess what? We now have defense prime contractors. We have OEMs. We have multiple applications that are looking at utilizing scandium in conjunction with aluminum, in particular, because of all of the attributes that, that small little amount of scandium adds to the aluminum. On the Skunk Works project, this was just super exciting for the company because it demonstrates 1 more time that there are applications for the scandium that we will be producing at NioCorp. Those -- the scandium production that we'll be putting together in the next 3 to 4 years, that is being heavily looked at by all these defense contractors because of what scandium does for aluminum. And in the case of Lockheed in particular, this is hugely important. They're going to be taking scandium-aluminum alloys adding those in very special ways to the F-22 and the F-35 fighter jets and it's going to increase our fighter pilot safety as well as increase their lethality as we look at them going out and protecting the United States. So this is a huge application. We couldn't be happier to have a partner like Lockheed Martin, and we're really excited to take this to the next level with Lockheed Martin.

Mark, you and your team have raised more than $370 million year-to-date. How do these capital raises position the company as it moves toward full project financing?

Yes. It's a very good question, Craig. And first of all, let me thank my team, who help us help every step of the way in this fundraising effort. And this fundraising effort is critical because as everybody knows, in a large project, you go through a project financing phase. That project financing phase needs debt, and it needs equity. The $370 million that we have raised goes to the equity portion of that project financing arrangement. As we've been very public, we're working very hard with Export-Import Bank of the United States to put the debt side of that package together. And the good news is that, that is moving along very well. And with our ability to raise that $370-plus million in 2025, we've increased the confidence level of the EXIM Bank on our ability to do that. They now are working hard to get that debt package to the final stages and final approval process. It's been a wonderful thing for the whole project financing effort. On top of that, we have project advancement activities that we get to undertake right now. So we have purchased all the land that we need to purchase for a 38-year mine life. We're taking out the shrubs and the trees and brushes, clearing out the land, getting ready for this new above-ground processing facility that's going to be located in Southeast Nebraska. And we're going to have, hopefully, after Board approval, we're going to have a very large project advancement activity where we start to install the portal for the underground mine. We'll have more news on that as this effort develops. But all of these project advancement activities helped the company stay on time and on budget when the real construction project starts and we say that we're breaking ground. So this is just nothing but positive for the company right now.

Mark, you've already mentioned some exciting things to be looking out for, what else should investors be looking now for in the next few months?

Well, first of all, we make a very, very strong effort to publicize what we're doing to keep our shareholders and the market informed. Transparency and honesty are 2 very critical values for this company. So what you'll see is we recently announced we finished purchasing all the land that we need for a 38-year mine life. You're going to see additional information coming out on drill holes. We also said we were sorry, the last press release we sent out for drill hole #2 because we really didn't want to send out press releases for every single drill hole, but the results from drill hole #2 came out the best that any drill holes ever come out and I wanted the market to know about that. I wanted our shareholders to know just how real and how fantastic this ore body is. So we are going to continue to see some work and analytical work from those drilling efforts. As we get further and further into the year, we're going to finish up the engineering effort where we're taking our new process flow diagram, raising that up to feasibility study level standards for engineering for feasibility study definitions. That would be an FEL 3 level of engineering, very substantial and something that the banks have to see in order to issue debt. So EXIM is looking for that product, that is on its way. We are 4 or 5 months into that effort. We're now seeing the light at the end of the tunnel for getting that engineering work done. We're going to continue to let the public know how we're spending our money because there is a lot of money in our treasury right now. We're not letting it sit. We're advancing the project and staying as far ahead of the project budget and the project schedule as is humanly possible. So they're going to see a lot of positive things starting to come out of the company, and we're always public about it, but they're going to see a lot of things coming out in the very near future here because we've had a lot of work that we've been undertaking. So this is an exciting time for the company. We hope to finish the fundraising for all of this in the next, call it, 2 to 8 months as well. So lots, lots, lots of work going on.

It is such an exciting story, Mark. Thank you.

Thank you, Craig. Again, always a pleasure. Yes, and we look forward to coming back again next time. Thank you.